Foreclosure Law in Minnesota
In Marshall, Minnesota, foreclosure is a process through which a lender that issued a mortgage loan retakes possession of the property that was bought with the mortgage in the event that the borrower has defaulted on his or her payments.
If an ordinary consumer faces foreclosure, it usually involves a home that was purchased with a mortgage from a bank. The bank will usually try to sell the house at a public option, with the hope of at least covering the remaining debt, to avoid taking a large loss.
Like every other state in the U.S., Minnesota allows homeowners facing foreclosure to opt for a foreclosure by judicial sale. This is a procedure through which a court oversees the sale of the house by the lender. The purpose is to see that the lender takes reasonable steps to notify the public of the auction, and other steps to ensure that the house sells for the highest price possible. This is meant to protect the borrower, making it less likely that they'll have to pay a large deficiency judgment (the remaining amount due on the mortgage if the house sells for less than the remaining balance).
In some states, original mortgages are regarded "non-recourse" loans. This means that once the house or other property that secured the mortgage is sold, and if it sells for less than the balance of the mortgage, the lender has to absorb the loss, and cannot sue the borrower for the remainder. This usually does not apply to second mortgages or refinanced loans.
How to Possibly Avoid Foreclosure in Marshall, Minnesota
Communication between you and your lender is perhaps the most significant way to prevent foreclosure. Ignoring the issue is guaranteed to be counterproductive. Honesty is the best policy when it comes to dealing with lenders.
You should be mindful of the fact that your bank wants you to make your monthly mortgage payments - they likely aren't scheming to trick you into giving up your home. This isn't out of altruism, it's due to the fact that foreclosure is almost never as lucrative for the bank in the long run than a mortgage that is paid in full over a period of years or decades, with interest accruing the whole time. For a bank, a foreclosure is just a last resort to cut their losses.
If you face sudden expenses, such as medical bills or a lawsuit, which put a serious but relatively short-term strain on your finances, you should notify your lender instantly. You might find that they are willing to accept lower payments, if this will keep you from defaulting.
As a last resort, you might consider a "short sale," which results in loss of the home, but it usually leads to a great deal of the debt on the mortgage being forgiven. Essentially, a short sale in Minnesota involves selling the house for whatever price it can fetch. The proceeds from the sale go to the lender, and if it sells for less than what's left on the mortgage, the balance of the debt is forgiven.
Can a Marshall, Minnesota real estate attorney help?
In Marshall, Minnesota, dealing with a possible foreclosure is never easy. However, the assistance of a reputable real estate lawyer can make the whole process much more bearable, and possibly delay or even prevent the foreclosure altogether.